How to calculate a mortgage loan

You’re looking for a home and it’s an exciting time. While going through the process, you need to know how to calculate the mortgage loan payment to make sure you aren’t getting in over your head. The USDA mortgage calculator can assist in giving you tangible numbers to consider.

When calculating a USDA home loan, think about all the expenses involved. It’s not just the mortgage payment, but also the homeowner’s insurance, association fees (if applicable), property taxes and of course, home maintenance.

What affects the mortgage payment?

There are three main factors that play a role in the mortgage payment: the amount you borrow, the interest rate, and how long it will take you to pay it off.

Remember, you may be approved for a high loan amount, but the more money you borrow, the higher the payment. Additionally, the higher the interest rate, the more money you spend each month.

To get to a ballpark figure without using a mortgage calculator, do the following:

  • Convert the annual interest rate into a monthly interest rate by dividing that number by 12
  • Add 1 to the monthly rate
  • Multiply the number of years on the mortgage by 12. This will give you the total number of monthly payments you will be expected to pay
  • Raise the result of 1, plus the monthly rate to the negative power of the number of monthly payments you are expected to pay
  • Subtract that number from 1
  • Divide the monthly rate by the result
  • Multiply the result by the amount you borrowed

For more information on USDA home loans and how to calculate your potential mortgage payment, contact the team at Mortgage Investors Group and speak to an associate today.

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